Wuxi Taihu Tractor Co. v. York Grp., Inc.

• Decision Date: 02 December 2014
• Docket Number: NO. 01-13-00016-CV,01-13-00016-CV
• Court: Texas Court of Appeals
• Parties: WUXI TAIHU TRACTOR COMPANY, LTD., Appellant v. THE YORK GROUP, INC., Appellee

WUXI TAIHU TRACTOR COMPANY, LTD., Appellant v. THE YORK GROUP, INC., Appellee

NO. 01-13-00016-CV

Court of Appeals For The First District of Texas

December 2, 2014

On Appeal from the 165th District Court Harris County, Texas

Trial Court Case No. 2008-74193

MEMORANDUM OPINION

Appellant, Wuxi Taihu Tractor Company, Ltd. ("Taihu"), challenges the trial court's rendition of summary judgment in favor of appellee, The York Group, Inc. ("York"), in Taihu's bill-of-review proceeding to set aside a default judgment.In four issues, Taihu contends that the trial court erred in denying it summary judgment and granting York summary judgment.

We affirm.

Background

In its original petition, York, a Delaware Corporation engaged in the business of manufacturing and selling burial caskets, sued Taihu, a company organized under the laws of the People's Republic of China and having its principal place of business in Wuxi, Jiangsu Province, China. York alleged that Taihu had copied and distributed York's casket designs in Texas, and it asserted claims for unfair competition and tortious interference with contract. York served Taihu through the Texas Secretary of State, who mailed service of process directly to Taihu's principal place of business in China. Taihu, proceeding pro se, filed an answer, first denying each of York's claims in detail and then challenging the trial court's jurisdiction. Taihu asserted that it did not conduct business in Texas and had not been properly served with process pursuant to the requirements of the Hague Convention.¹

York, having not been served with Taihu's answer and unaware that it had filed an answer, moved for an "interlocutory default judgment." Taihu filed a "Demurrer to [York's] Motion for Interlocutory Default Judgment," asserting thatit had "responded to [York's] complaint by posting an answer via registered . . . mail on June 9, 2006 to [the Harris County Clerk], as requested in the citation," the answer was delivered on June 12, 2006, and York's "allegation that [Taihu] had failed to respond [was] false."

In the months thereafter, York served Taihu with deposition notices and discovery requests. Taihu objected on the ground that it had not been properly served, and it refused to produce any documents or appear for deposition. York then moved to compel Taihu to respond, and it complained that Taihu, as a corporation, could not be represented by a non-lawyer and had, for over six months, failed to retain counsel. York sought an order to admonish Taihu to retain counsel within ten days or be found in default.

In response, Taihu filed a "Demurrer to . . . York's Motion to Compel Written Discovery and Appearance for . . . Deposition and Motion for Sanctions." Taihu argued that York's motion should be denied because York had neither "attempted to conference with [Taihu] in connection [with] discovery issues" nor served its discovery requests pursuant to the requirements of the Hague Convention. Taihu complained that having to appear at a deposition in the United States would be "complicated, burdensome, and inconvenient." And it reiterated its assertion that the trial court lacked personal jurisdiction over it. Finally, Taihuasserted that it "may not be compelled to retain an attorney for York's frivolous claim."

On May 21, 2007, the trial court ordered Taihu to retain counsel within ten days, produce all requested discovery within fifteen days, and appear for deposition within twenty days. It admonished Taihu that if it did not retain counsel as ordered, it would be found in default.

In June 2007, Dai Qingkang, an attorney licensed in China, contacted the trial court by email, asking a series of detailed questions about the docket control order and mediation. The trial court responded to the questions and suggested that Qingkang should "contact local counsel in Houston." Qingkang then filed, on behalf of Taihu, an objection to mediation and a motion to dismiss the lawsuit. He asserted that it was "unfair and against common sense to force [Taihu] to render costs in employing an attorney for this present case which is obviously groundless and lack[s] sufficient minimum evidence to support [York's] allegations and claims."

On July 26, 2007, the trial court, after notice, called the case to trial, and Taihu did not appear. The trial court, concluding that Taihu had "wholly failed to comply" with its prior order to retain counsel, rendered a default judgment against Taihu. It noted that, by its prior order, it had put Taihu on notice that it was subject to sanctions for failure to comply, lesser sanctions were not sufficient to secureTaihu's compliance, Taihu continued to abuse the discovery process, York had been prejudiced by Taihu's noncompliance with the rules, and Taihu's "wrongful conduct justifie[d] the presumption that [Taihu's] defenses [we]re without merit." The trial court also ruled that Taihu had "wholly failed to comply with the requirements of [Texas Rule of Civil Procedure 120a] as to its purported special appearance. Therefore, it denied Taihu's Motion to Dismiss and "any other purported special appearance" by Taihu. It held that the material allegations in York's original petition were deemed admitted, declared that Taihu had "unfairly competed against York," and enjoined Taihu from

• copying or imitating the design of any York casket;

• causing any casket to be manufactured abroad and imported into the United States without a permanent label which states that the product was "Made in China". . . ;

• causing any casket to be imported, marketed, advertised, displayed, or sold under or in connection with the name "York," . . . and/or with any of the following Brand Names set forth in Exhibit A, which is attached and incorporated in this Final Judgment for all purposes;

• passing off, inducing or enabling others to sell or pass off, as authentic products produced by York otherwise authorized by York, any product not manufactured by York . . . ;

• copying . . . any advertisements . . . or . . . photographs; and/or

• conspiring with, causing, aiding, assisting, . . . any other person or business entity in engaging in or performing any of the acts proscribed [above].

York then non-suited its claims for unliquidated monetary damages. After Taihu received notice of the final judgment, it did not appeal.

In 2008, York sued to enforce the judgment, alleging that Taihu was continuing to copy and sell York's designs. Taihu retained Texas legal counsel, answered with a general denial, and admitted, subject to any defenses it had raised regarding the jurisdiction of the trial court, that it had been properly served and had made an appearance in the case. Taihu then removed the enforcement action to federal court, asserting diversity jurisdiction.

Subsequently, Taihu initiated the instant bill-of-review action in state court, seeking to set aside the underlying default judgment.² In its petition, Taihu alleged that "the face of the record [did] not prove that [it] was properly served with process under the Hague Convention" and it "had no counsel of record, which [was] mandated by Texas law for a corporation to make an appearance."

In 2012, Taihu filed a summary-judgment motion, arguing that it was entitled to judgment as a matter of law because it was undisputed that it had not been properly served. It further argued that because a corporation can only appearin court through a licensed attorney, none of the documents that Taihu had sent to the trial court in the underlying action constituted an appearance.

York responded, arguing that by expressly representing to the trial court in the underlying proceeding that it had filed an answer, Taihu had defeated York's motion for interlocutory default. Therefore, "not only did the facts not support [Taihu's] argument," but Taihu was judicially estopped from now asserting that it had not answered.

York also filed a cross-motion for summary judgment, seeking dismissal of Taihu's bill-of-review action. It asserted that Taihu had been served with process through the Texas Secretary of State; did not file a proper special appearance or motion to quash service³; waived any defect in service because it "admitted it filed an Answer" and participated in its defense; had notice of the underlying judgment and failed to move for a new trial or appeal; and failed to plead and prove the elements required to prevail on a bill of review.

After the trial court conducted a hearing on the motion for new trial, Taihu amended its petition for bill of review, again alleging that it had not been properly served and had not answered. It also asserted, alternatively, that it had a meritorious defense, namely, that "York ha[d] not alleged a protected intellectual property interest" that it was prevented from raising by the failure of service.Taihu further asserted that there is no record of an evidentiary hearing or the trial court attempted lesser sanctions before it rendered its default judgment.

The trial court granted York summary judgment and denied Taihu's cross-motion for summary judgment on Taihu's petition for bill of review. Taihu's motion for new trial was overruled by operation of law.

Standard of Review

We review a trial court's grant or denial of summary judgment on a bill of review de novo. Boaz v. Boaz, 221 S.W.3d 126, 131 (Tex. App.—Houston [1st Dist.] 2006, no pet.) (reviewing summary judgment on bill of review). To prevail on a summary-judgment motion, a movant has the burden of establishing that it is entitled to judgment as a matter of law and there is no genuine issue of material fact. TEX. R. CIV. P. 166a(c); Cathey v. Booth, 900 S.W.2d 339, 341 (Tex. 1995). Thus, to be entitled to summary judgment, a bill-of-review plaintiff must conclusively prove all the elements of its bill-of-review action as a matter of law. See Hernandez v. Koch Mach. Co., 16 S.W.3d 48, 60 (Tex. App.—Houston [1st Dist.] 2000, pet. denied). A defendant moving for summary judgment must...